Business

Why These 6 Refiners Have Been Smiling For 34 Days

Companies with a history of sound earnings and revenue growth are more likely to continue to see gains going forward.

Today's Screen Of The Day is Top Fundamentals, stocks with three-year earnings per share and sales growth rates of at least 25%, a good place to fish for stock watch-list candidates for successful investors.

The sector is growing rapidly in sync with tremendous expansion of oil and natural gas production, especially at rich shale oil deposits in places like the Bakken formation in Montana and North Dakota.

Oil and gas are being recovered using new technology like hydraulic fracturing, or fracking. Research indicates the U.S. has the world's largest shale oil reserves.

That means refineries here enjoy relatively cheap crude.

Refiners as a group sold off Wednesday amid slumping oil prices and a 108-point drop in the Dow Jones industrial average. But most of them were retreating after a sharp run from new highs amid an outlook for big profits.

As of Wednesday, retail gas prices at the pump had climbed 34 days straight.

Valero stock climbed 71% from a Nov. 19 intraday low to a 47.73 close Tuesday. Consensus of 20 analysts polled by Thomson Reuters is that it will report a stunning 226% rise in earnings per share this quarter. That follows a 2,250% EPS spike reported on Jan. 29.

Tesoro mainly operates in the western U.S. Last quarter, it earned $1.34 per share, a strong reversal from an 89-cent-a-share loss the same quarter a year earlier. Analysts expect a 146% jump in EPS this quarter. Shares slid 5.6% Wednesday.

The stock rose somewhat late Wednesday after HollyFrontier hiked its quarterly dividend by 50% to 30 cents a share, along with a special 50-cent-per-share payout.

CVR Energy, a member of the IBD 50 list of top stocks., is a refiner, nitrogen fertilizer maker and a holding company that owns more than 80% of CVR Refining, which operates as a separate company.

CVR Energy's stock is tops in the group, with a best-possible 99 IBD Composite Rating, meaning it's outperformed 99% of all stocks on key indicators such as profit and sales growth. Shares fell 4.3% in the stock market Wednesday.

CVR Refining spun off from its parent on Jan. 17 and began trading at 20 a share. As of Tuesday, its stock price had appreciated an amazing 59%. In addition to refining, it also operates more than 350 miles of oil pipelines. Shares dropped 5.4% Wednesday.

Calumet, a refiner of lubricating oil, solvents, fuel and other products, reported Q4 earnings on Feb. 13. Profit jumped 46% to 73 cents a share, in line with estimates. Revenue grew 20% to $1.22 billion after acquisitions last year, easily besting views of $1.06 billion. Shares were down about 3% Wednesday.